Houston-based Plains All American and Oryx Midstream Holdings make plans to merge their respective assets, operations and commercial activities within the Permian Basin into a newly formed strategic joint venture, Plains Oryx Permian Basin LLC, the companies announced July 13.
Privately held Oryx Midstream Holdings LLC, based in Midland, Texas, will contribute all of its assets in the region to the new JV, which will hold roughly 5,500 pipeline miles and about 6.8 million barrels per day of pipeline capacity. Plains’ long-haul pipeline systems that go through the Permian Basin will not be included in the JV.
Plains will operate the JV and receive 65% ownership of the company, while Oryx retains 35%.
“This joint venture is a natural combination and logical next step to optimizing our highly complementary systems," said Willie Chiang, chairman and CEO of Plains All American. "Structured as a debt-free JV entity through a cashless transaction, this aligns with Plains’ financial and portfolio optimization strategies, is near-term free cash flow accretive to Plains and Oryx, and reinforces Plains’ ability to maximize free cash flow for our investors, while enhancing our overall credit profile.”
Oryx CEO Brett Wiggs said the company has committed since the team started Oryx in late 2013 to being a leading strategic partner to its customers and to building a world-class system in the Permian Basin.
“This combination is a natural evolution of the Oryx growth story and perpetuates that commitment, creating the premier crude oil logistics system in the basin, increasing connectivity, enhancing reliability, and strengthening efficiencies for our customers," said Wiggs. "We look forward to partnering with Plains and are confident that Plains Oryx Permian Basin will continue to grow and provide producers with the best solutions in the region. Finally, I would like to personally thank every employee of Oryx for their incredibly important roles in the development, construction, operation and management of this great company. I have no doubt they will continue to do the same for Plains Oryx Permian Basin.”
The cashless, debt-free transaction is expected to close in the fourth quarter of 2021.
